Is the housing crisis getting worse? 2021 has seen a drastic rise in home prices due to low supply and high demand. The month-by-month rise was around 2.3%, which would normally be a typical rise for an entire year. There has been a slight change in recent months - while the housing market is still hot, it’s starting to cool off as Americans hesitate to continue buying due to the exorbitant prices.
However, as many are unable to solve their housing situation by buying, they are looking to rent. In turn, this has caused rental prices to skyrocket. Rental prices for single-family homes rose around 7.5% in June since last year, which is the single highest rise since 2005. With homes in short supply, Americans are left with few solutions to solve their housing situation.
Nationally, the average monthly rent in June was over $1500, for the first time ever. Additionally, according to the National Apartment Association, occupancy was at 96.5%, the highest recorded since 2000. In California, Bakersfield leads the list of small metros with a 99% occupancy rate.
Out of the larger metro areas, Riverside and San Bernardino are following suit with a 98.5% occupancy rate. By all statistics, the surge in home prices is fuelling an increase in rental prices, further exacerbating the housing crisis. Rental prices often follow an increase in home prices, however, the current rate is almost unprecedented, leaving many Americans stranded.
According to some predictions, prices will continue to rise for the next 12 to 18 months. So where does that leave renters? At the beginning of the pandemic, people were leaving large metro areas for their hometowns. But as prices in smaller places began to rise due to high demand, people have once again started going back to cities.
Smaller metro areas still lead the nation when it comes to the annual increase, and some large metro areas, like New York and the Bay Area, reported an annual net decline. But other larger metro areas are recovering – Phoenix experienced double-digit rent growth from last year. And if people surge back to the cities, one has to ask – how much higher will the demand drive up rental prices?